The federal government's wide ranging competition inquiry has taken aim at big businesses, saying big companies should be responsible for the financial troubles of their smaller competitors if they are found to have purposely damaged their businesses.

The review, chaired by Professor Ian Harper, recommeded the so-called "effects test" depite the protests of many business groups.

"Businesses and trading conduct should be prohibited if it has the purpose to, or would have or be likely to have the effect, of substantially lessening competition," Professor Harper said in his draft report.

"That gives all firms, big and small, an opportunity to compete on merit. That is, based on the value to consumers of the competing products they offer."

Richard Goyder, the chief executive of Wesfarmers which owns Coles, had vehemently opposed such as test, saying it would deter businesses from seeking efficiencies, keeping prices low, and risked making consumers worse off.

Former consumer watchdog chairman Graeme Samuel meanwhile said it would be "economically dangerous".

Professor Harper acknowledged that the test might defer companies from undertaking a businesses strategy that enhances its competitiveness and creates durable consumer benefit for "fear that, if the strategy is successful, it might be assessed as having the effect of substantially lessening competition".

"To allay any concern, the prohibition against unilateral anti-competitive conduct should be made subject to an exemption for such business strategies or decisions," he said.